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The Mandatory Arbitration Agreement serves as a crucial legal instrument in Indonesian business relationships, providing a clear framework for dispute resolution outside the traditional court system. This document becomes particularly important given Indonesia's complex legal landscape and the potential challenges of court litigation. The agreement is designed in accordance with Law No. 30 of 1999 and related regulations, ensuring enforceability both domestically and internationally. It typically includes detailed provisions on arbitration procedures, arbitrator selection, costs, and enforcement mechanisms. Companies often implement this agreement either as a standalone document or as a clause within broader commercial contracts to ensure efficient and confidential dispute resolution.

1. Parties: Identification of all parties entering into the arbitration agreement, including their full legal names, addresses, and registration details

2. Background: Context of the agreement and the relationship between the parties

3. Definitions: Key terms used throughout the agreement, including technical and legal terminology

4. Agreement to Arbitrate: Clear and unambiguous statement of the parties' agreement to submit disputes to arbitration

5. Scope of Arbitration: Detailed description of which disputes are covered by the arbitration agreement

6. Arbitration Rules and Procedures: Specification of the applicable arbitration rules and procedures, including the chosen arbitration institution

7. Seat of Arbitration: Designation of the place of arbitration and governing law

8. Language of Arbitration: Specification of the language(s) to be used in arbitration proceedings

9. Number and Appointment of Arbitrators: Process for selecting arbitrators and the number of arbitrators

10. Costs and Fees: Allocation of arbitration costs and fees between the parties

11. Confidentiality: Obligations regarding confidentiality of the arbitration proceedings and outcomes

12. Final and Binding Effect: Statement that the arbitration award shall be final and binding on the parties